Key Takeaways to Cobalt-Rhodia Deal

As I reported last week, Rhodia has signed a deal with Cobalt Technologies to develop n-butanol biorefineries in Latin America. Other than plans to use bagasse, and Rhodia’s intention to use the n-butanol to extend its range of renewable-based solvents, few details about costs and capital were disclosed.  Fortunately, I had the opportunity to speak with Cobalt’s Technologies’ CFO Steven Shevick last week, and although specifics remain under wraps, he gave me a quick science lesson on n-butanol and an overview of the market opportunity.

Key takeaways:

• Without doing any downstream derivatization, n-butanol has a large existing market. It is, in fact, 5-7 times larger than the existing chemical market opportunity for isobutanol, another biobased four-carbon molecule much closer to commercialization than n-butanol. That’s not to say isobutanol is not an extremely handy molecule. Its higher octane makes it a much better fuel blendstock.
•   Though its first partnership, joining forces with recent Solvay acquiree Rhodia gives Cobalt a quick start out of the gate.
• Cobalt expects its n-butanol to be 40%-60% cheaper than n-butanol produced via petrochemical routes. That could make its n-butanol an economically viable precursor to butene, a high-volume opportunity
• Cobalt’s fermentation process doesn’t use genetically modified organisms. The company’s technology is based on the ability to select high-performing, but naturally-occurring mutants. That’s especially interesting when one considers how quickly biotechnology is advancing toward completely synthetic organisms
• Though Shevick believes Cobalt needs to build more partnerships before considering capital-raising options like an IPO, he offered a CFO’s view of the IPO market. His verdict: “It’s not great. We’re fortunate that some guys got out there and were successful, and we hope it comes around soon, but it’s not favorable right now.” Renewable IPOs on deck include Elevance, Genomatica, and Myriant.